NAMA has just now issued a statement, the full text of which is
“In conjunction with the arrangements announced today by the Minister for Finance for the appointment of a Special Liquidator to IBRC, NAMA has been directed to establish a special purpose vehicle (National Resolution Ltd. – NRL) to acquire a floating charge over certain IBRC assets. These assets are currently used as collateral by IBRC as part of its existing repo arrangements with the Central Bank of Ireland. As consideration for the floating charge, NAMA will issue to the Central Bank new Senior Bonds which are guaranteed by the Minister.
In the period to mid-2013, the Special Liquidator will seek to value and sell the secured underlying assets subject to the floating charge. After the sales process conducted by the Special Liquidator has been completed later in the year, NAMA will acquire the unsold loans in the IBRC loan portfolio in addition to the proceeds of any asset sales conducted by the Special Liquidator during the sales process.
Speaking on behalf of the NAMA Board, Chairman of NAMA, Mr. Frank Daly, stated: “NAMA is fully committed to managing the new responsibilities which have been delegated to it by the Minister and to realising the maximum possible return for the taxpayer from the portfolio that it is due to acquire later in the year”. [statement concludes]
The expectation on here is that NAMA will issue €16bn of new bonds to acquire the after-provision loans at IBRC. And that NAMA will employ about 400 of the 700 IBRC staff (there are already 300 staff of IBRC’s 1,000 working on NAMA loans).
UPDATE: 8th February, 2013. It is understood that NAMA will not be paying a long term economic value premium on its acquisition of loans, and it remains unclear what loans NAMA will be able to bid on, and if it will have a right of matching first refusal.
NAMA Wine Lake 
Not the way I read it. I think they are saying that the liquidator has been directed to sell as much as possible over the next 6 months and NAMA will acquire the residue.
@WSTT, you don’t generally go to the trouble of buying a dog only to bark yourself. If NAMA is paying Long term Economic Value as set out in the European Commission scheme, then the liquidator would presumably be beyond reckless in disposing of loans to anyone else but NAMA.
I’ll bet you all the same that isn’t the case. They will auction the performing stuff at PV. Then the crap will be assembled like the dross box at a auction and dumped. I suspect this will be done at lightening speed. Then the loss, whatever number it is, will be brought in.
The imperative has changed. Long term value is all very well but if you are paying for it through the nose where on earth is the good. And it is far far cheaper to pay down a known figure (the loss)whatever that is eventually. Than to pay on the drip for years in expectation of a fictional up-side.
@NWL, Staff in NAMA told today that they would only be acquiring what the liquidator could not sell during the next 6 months.
@WSTT, why would one state-owned bank sell assets on the open market when another state-owned entity will pay long term economic value on top of market value. Does left hand know what the right is doing (furiously)
@NWL
“will pay long [short] term economic value on top of market value” How did that work out for you in 2007?
Oh we’re back to LTV, God help us
An organisation sitting on a 10 billion loss takes over the debts of an organisation sitting on a 30+ billion loss. Taxpayer on the hook if things go wrong. But sure bejaysus, what could possibly go wrong?
Noonan was on the 6one news saying most of the floating interest rate will flow back to the state (aside from a few sold to ‘test the market’), meaning the ‘blended’ government bonds will cost ~1%pa. Considering the capital payment on them is due later than the Nama bonds, would it not be better to avoid using Nama bonds altogether?
Or is the Nama bonds approach just being used to to reduce our headline national debt, considering it’s ‘off’ balance sheet.
Also if inflation runs at 2%pa. Are we not availing of 1% pa monetary financing?
The following exchange took place in the Dail this afternoon which throws a little more light on the bond.
Michael McGrath: The Tanaiste might say in his response how long the Irish Central Bank will be allowed to hold these long term Government bonds, which is the key issue at the heart of all of this. As long as the bonds are held by the Irish Central Bank the true interest rate to the State is reduced
The Tanaiste: On the specific questions asked, the Irish Central Bank will only sell the bonds where such sale is not disruptive to financial stability. There is a schedule of sales, which if the sale conditions are right, will amount to €500 million up to end 2014, €500 million in the next four years, €1 billion in the following five years and €2 billion per annum thereafter. As I stated, such sales will only be in circumstances where they are not disruptive to financial stability. The interest rate will be a floating interest rate. We expect it to be between 3% and 3.5%.
@NWL
NAMA will issue bonds of approx ~16 bn in respect of the IBRC assets (minus the PN). Is NAMA obliged to repay these bonds before 2020, in addition to its other bond commitments?
@NWL
I welcome the deal.
It was probably as good as could be got. It reduces the deficit by about 1bn per year from now until 2021 and reduces the cost of the Anglo/IBRC debacle to a little less than 1bn per year.
I appreciate that this debt should never have been public debt, but short of going to all out war with the EZ, this is about as good as was going to be got.
There are two particular concerns
1. The amount of State bonds that must be sold back into the market in about 10 year time is very high. These may have to be sold at a sharp discount to par.
2. How will NAMA manage to collect 16bn cash from loans, some of which will be the dregs of the loan barrel.
Collins phrase the ‘freedom to achieve freedom’ comes to mind.